Gas ETF Gains $518 Million in Flows Despite Price at Record Low

(Bloomberg) -- Investors continued to increase their bets on two exchange-traded funds tied to natural gas as prices for the heating fuel show signs of bottoming following a seven-week selloff that sent the commodity plunging more than 60%.

The $1.1 billion ProShares Ultra Bloomberg Natural Gas (ticker BOIL) saw $146 million in inflows in the latest session, which increased the fund’s assets by 15% to its highest level in at least a year, according to data compiled by Bloomberg. The fund has seen eight straight days of inflows, amounting to $517.8 million, even though its price is hovering at its record low.

Meanwhile, the $1 billion United States Natural Gas Fund LP (UNG) also saw investors pile in cash consistently during the month of January — barring one session — pushing the fund’s assets to above the billion-dollar mark, according to data compiled by Bloomberg. Its price, too, has dropped significantly since the start of the year. 

Natural gas futures have nearly halved this year to the lowest levels since 2020 as abnormally mild winter temperatures have eroded US demand for heating. A prolonged shutdown at a major Texas export facility in Freeport has also weighed on prices, while signs that the terminal could resume shipments Feb. 11 have provided some support to the commodity this week. The Freeport LNG has the capacity to export roughly 2% of US daily gas production. 

“Natural gas has gotten extremely oversold,” Alec Young, chief investment strategist at MAPsignals, said in an interview. “It’s declining because of the crazy warm winter that we’re having throughout the Western world. This is crazy, it’s like 50 degrees in New York. February is the coldest month of the year, so it’s very unusual. But it’s happening globally and it’s been happening all winter.”

Over in Europe, natural gas prices headed for a weekly loss as mild weather caps demand. Benchmark futures are set for a weekly decline of about 7%, even as prices gained Friday amid an outage in Norway. The prospect of warmer temperatures and additional supplies is helping to ease Europe’s energy crisis as the last stretch of winter approaches.

“The European situation remains a worry and investors are watching for a rebound in inflation pressures,” Rob Haworth, senior investment strategy director at US Bank Wealth Management, said. “We also think there is hope for a meaningful bounce, similar to what we saw in January for tech stocks.”

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